Though the two companies came to similar conclusions from entirely different directions, the portent was clear: The stampede of publishers to corral off-the-shelf hardware and software forced the two largest companies in the traditional supplier business to cut their herds.

The message, too, was clear: There is just not enough business to justify operating a company the size of Atex and SII. Throughout the late '80s and early '90s, both companies lumbered along with 300 to 400 workers worldwide.

But each company is in the process of coming under new owners, if not a new management team, and there doesn't seem to be enough revenue out there to sustain the hundreds of workers that had heretofore seemed necessary.

Here's how each of the companies concluded that layoffs were necessary, and how they transpired:

Atex
In the midst of a prolonged acquisition that has already caused a change in upper management, Atex announced on Jan. 26 that it had reduced its North American staff by 50 people, or 25 percent of its Bedford work force.

Cuts came in all departments except customer field support, Atex said. The Atex office in Fort Lauderdale, Fla., would be closed; sales and support for Latin America would be maintained through licensed resellers and out of headquarters in Bedford, the company said.

Company executives said that following the layoffs, Atex still employed 290 people worldwide -- 150 in the Americas and 140 in Europe and Asia.

The acquisition of Atex by Sysdeco Group AS of Norway (see The Cole Papers, January 1995), scheduled to be finished by the middle of the month, was still under way when the layoffs occurred.

The layoffs were announced by Graham Shaw, who has been named chief operating officer of Atex worldwide by the Atex Supervisory Board, comprising executives from the company's major stockholders -- Janivo Holdings BV and Euroventures Benelux BV of the Netherlands, and Advent Ltd. and the South Yorkshire Pension Authority of the United Kingdom. The former COO, Ian Anderson, remains with the company, though in what capacity is unclear.

Shaw had been the managing director of Atex Europe. He formerly was head of Crosfield News Electronics, the company that took over Composition Systems Inc. and was ultimately folded into Camex to create Du Pont Newspaper Systems, which died late last year.

In addition to naming Shaw as chief operating officer, in early January the Supervisory Board also extended Sysdeco's due diligence, first through the end of January on a non-exclusive basis and then, on Jan. 17, through Feb. 4 on an exclusive basis.

In turn, Sysdeco made a "major injection" of money, which Shaw characterized in a Jan. 20 letter to Atex users as "a loan." Shaw also told users that he was "confident" the merger -- which brings in not only Atex, but also SyPress Oy of Finland, makers of the Atex Enterprise classified system -- would be completed by mid-February.

Shaw also said he planned a review of the company's annual operating plan and that he anticipated "further restructuring of the company."

(Because of tight deadlines and travel, we were unable to interview either Shaw or Atex President and Chief Executive Officer Danny Chapchal for this article.)

Reaction to the layoffs was muted.

"There's concern in the user community," said Cindy Smith, the president of the Atex Newspaper Users Group (ANUG). "There's personal concern for the people they've known, and a concern that things will continue to move along."

Smith, production director of Pennysaver Corp. of Yorktown Heights, N.Y., added, "It was a lot of people, but we weren't terribly surprised."

Smith and other members of the ANUG executive committee met Jan. 19 with not only Shaw, but also Johs Jamne, the managing director of Sysdeco, and Marlow Einelund, a key Sysdeco executive involved in the due diligence. Smith wouldn't say whether Shaw, Jamne or Einelund hinted at layoffs during that meeting.

"It was a very good meeting," she said.

A large East Coast Atex customer also indicated the layoffs were no real surprise. "We knew that something had to be done, we'd heard rumors," the publishing systems executive said. "Nobody we deal with directly was let go, so we don't see it as a big deal."

A week before the layoffs, the company let go F. Barry Truitt, who had been a sales executive with the company for three years, most recently as vice president of corporate accounts. Other sales executives let go during the layoffs include Ed Easley and Steve Dienna.

Jerry Riley, who had been in charge of Atex's West Coast sales effort, has been brought back to Bedford to handle all North America sales activities.

In an unrelated move, Michael Akillian, the company's director of community and public affairs, announced his resignation, effective Feb. 3. Akillian had been the company's direct contact to its user groups worldwide dating back to the time it was owned by Eastman Kodak.

Akillian will become vice president of a small Massachusetts public relations and advertising firm.

System Integrators
In another indication of the changing nature of the newspaper publishing systems supplier business, System Integrators Inc. of Sacramento announced a reorganization in mid-January

The longtime supplier of editorial and classified front-end systems, which emerged in late October from a year-long brush with bankruptcy, said it was restructuring into five autonomous units that each had profit and loss responsibility.

The restructuring eliminated about 40 jobs. SII says its Sacramento work force is now at 219, with another 26 employees stationed around the world.

Two new units -- publishing products and publishing solutions -- were created, and three existing units -- customer support, professional services and MediaBridge, the company's foray into new media products -- were given the additional responsibility of having to pay their own way.

The publishing products division will encompass the company's traditional editorial and classified front-end business. It will be run by John Cook, a longtime company executive most recently involved in the company's "middle-market" effort that sold editorial and classified front-end products into medium-sized newspapers.

The publishing solutions division will handle the more complex issues of integrating SII products into metropolitan newspaper environments, including SII's pagination product, MTX Layout.

Company executives said most of the labor cuts came about because the principle behind the publishing solutions division will be its reliance upon "outsourcing" and contract programming.

"When we looked at our operating procedure," said William Aaronson, SII's president and chief executive, "we saw a procedure that had not changed in about 20 years."

Aaronson went on to say that he, company executives and the new board of directors installed by the ownership group that came about because of SII's Chapter 11 bankruptcy filing (see The Cole Papers, December 1994) believed that the company's "core competency" was in specifying software, not necessarily in writing it. SII would explore hiring contract programmers not only from those recently laid off, but also overseas in South Korea, India and Russia, he said.

Aaronson said he is heading up the publishing solutions division temporarily while he searches for an executive from the outside.

Many longtime SII employees were among those laid off. Three notables were former R&D chief Doug Johnson, System/22 support chief John Reeder, and one of the principal architects of Interactive News Layout (INL) and MTX Layout and its underlying composition code, Frank Pazoureck.

Within a week, Pazoureck contacted existing SII pagination customers to announce he was in business for himself. "I wrote every line of the 30,000-plus lines of Styl code and designed each of the Styls and Substyls that are delivered with the INL package," Pazoureck wrote customers.

Pazoureck, the former composing room foreman of the now-defunct Sacramento Union, set up his own composition business in 1982, using SII computers. While running that business, Pazoureck designed Force, a composition language based on SII's Styl programming language.

In 1984, Pazoureck sold his business to SII and became an SII employee. The company renamed the composition language Stylplus, and when it elected to abandon its plans for an all-encompassing pagination management system in 1987, Pazoureck showed how Stylplus could be used as a rudimentary page layout system.

Over the next eight years, Pazoureck and other SII engineers molded Stylplus into INL (which ran on SII's proprietary Ring operating system) and, eventually, MTX Layout (which runs on OS/2).

Pazoureck may not have seen the last of SII. "I don't think it's unreasonable or unlikely," Aaronson said, "that we too will be using Frank on a contract basis."

At first, SII's customers were concerned about the reorganization and especially the layoffs. But Chris Caneles, the systems director of the San Francisco Examiner and president of the System/25-System/55 Users Group Inc., said he's "guardedly optimistic" that the restructuring was the right thing to do.

"To me," Caneles said, "it boils down to whether it brings them back to being on the top of the pile. If it does, it's a good thing."

Caneles said he was concerned that with programmers who don't have a background in newspapers, SII's software might have quality problems. "There will be things we forget to tell SII" in the specifications, said Caneles, and programmers without a newspaper background won't know to put them in.

SII also has restructured its sales force, Aaronson said, with sales people working either for publishing products or publishing solutions. This means that if a newspaper wants to talk about pagination, the publishing products salesperson won't be pushing MTX Layout.

"What we are saying is that our core business is front-ends," said Aaronson. "When it comes to pagination, we are willing and able to work with other pagination vendors, including our own pagination product."

-- dmc

Atex Publishing Systems Corp.,
(617) 275-2323;
System Integrators Inc.,
(916) 929-9481.

From THE COLE PAPERS, February 1995, Copyright © 1995, All Rights Reserved.